22. Variable costing is also called ________.

A) functional costing

B) indirect costing

C) absorption costing

D) the contribution approach

Answer:

23. What is gross margin?

A) sales minus operating expenses

B) sales minus other expenses

C) sales minus cost of goods sold

D) sales plus other income

Answer:

24. If the net present value of an investment project is positive, then the project is ________. If the net present value of an investment project is negative, then the project is ________.

A) ignored; accepted

B) desirable; undesirable

C) unacceptable; acceptable

D) rejected; accepted

Answer:

25. An investment of $42,000 is expected to generate the following annual cash flows:

Year 1 $10,000

Year 2 $15,000

Year 3 $15,000

Year 4 $12,000

Assume straight-line depreciation is used. Ignore income taxes. What is the payback period?

A) 3 years

B) 3.17 years

C) 3.83 years

D) 4 years

Answer:

26. The internal rate of return model determines the ________ at which the net present value of an investment project equals ________.

A) cost of capital; a positive number

B) hurdle rate; a positive number

C) interest rate; zero

D) discount rate; a positive number

Answer: